How to clear unearned revenue balance that has been carried over for 2 years. A customer signed a contract and paid fees in full in 2016. Half of the invoice amount was earned based on the performed work, and the other half was kept unearned since the work wasn't complete. In the middle of that the project got cancelled. What is the best way to handle this outstanding unearned portion of invoice? Thanks.
How to clear unearned revenue balance
Answers
The original entry would have been:
DR Cash
CR Unearned Revenue (Liability)
Assuming the agreement made you refund the customer, I believe 50% would be recognized as revenue and 50% would be recognized by decreasing Cash.
DR Unearned Revenue (Liability) $100
CR Cash $50
CR Revenue $50
Filed Under:
Accounting